For SBA lenders
Short answer
The maximum allowable loan term for a 7(a) loan used solely for working capital, or for machinery and equipment, is 10 years.
SBA loan terms are based on the use of proceeds. Loans for real estate or a combination of real estate and other purposes can have a maximum term of 25 years. However, for working capital or machinery and equipment, the maximum term is capped at 10 years, or the useful life of the equipment, whichever is less.
A new business obtains a $150,000 7(a) loan entirely for working capital to fund initial operations and marketing. The lender sets a 10-year term, aligning with SBA policy for working capital loans.
Insider move
Lenders must correctly apply the SBA's maximum loan term rules based on the primary use of proceeds. Using an incorrect term, especially extending it beyond the maximum for working capital, could jeopardize the SBA guaranty.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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